– stop kidding yourself that you add a lot of value beyond recruiting/intros/governance/financing/selling companies. this let’s you relax your “need to own X% of the company” rule and also lets you focus on things you really help with.

– have offices that look and cost like startup offices. or better yet, don’t have offices at all – spend your time visiting companies.

– kill the partner presentation. too much emphasis placed on presentation skills. instead go spend a day working with the CEO before you invest to get to know them in their real habitat.

– change the accounting so you can start caring about IRR more than just amount of money returned.

– spend lots of time networking with press & potential bizdev partners so you can make valuable intros when needed.

– don’t talk/tweet/blog about your vineyard, yachting, golfing etc while you tell your CEOs to work non-stop and be frugal etc.

– use your brand (and/or join together with other VCs) to recruit top talent (particularly engineers) from top schools. tell top students they are guaranteed a job in your portfolio even if the one they join goes under.

– have standardized, simple legal documents to keep seed and Series A financing costs under $10K.

– say no to companies. saying “come back later” feels like a free option to you but actually hurts you and the startup in the long run.

– never miss a meeting or show up late without apologizing

– no smart phones in meetings. better to just not take the meeting or make it 15-30 minutes but actually listen.

I like this one the best – “i’d hire some female investors (and maybe some male receptionists).”..I am sure there are thousands of entrepreneurs out there who would love the chance to work the front desk at a VC fund, just to be around it.

Chris, Really well articulated. Do you think this translates to small/seed stage VC firms as well, or are they already doing most of this from what you’re seeing? The post title seems to indicate you’re recommending this for big firms, but I’m especially curious about whether the economics and management fees work for smaller firms as well.

Great post Chris. We are doing many of the things on this list at Real Ventures II (new seed fund in Montreal set to close next month). In fact, our salaries are even lower. Fund I operated with no office. Having spent 11 years on the operating side of startups, I plan on doing things differently now that I am also investing. You’ve hit on a few them. Biggest one for me is filtering way better, so I can spend most of my time with my companies or networking on their behalf.Keep pissing mainstream VCs off!

Nice. The “birthrate of startups” post by Fred Wilson is great pre-game for this conversation. I don’t know much about what VC’s are doing for companies now but I know of many companies who died an unnecessary death due to negligence at their hands. This seems like a pretty good model for offloading and/or streamlining operations type stuff, thereby empowering start-ups to focus on core competencies, like product and customer development.

*”have offices that look and cost like startup offices. or better yet, don’t have offices at all – spend your time visiting companies.”*Not sure about this one. A VC firm’s customers are its Limited Partners, NOT its portfolio companies. And it seems like having big, attractive offices is a requirement for attracting LPs.A venture capital firm is competing not only against other VC firms, but also against hedge funds, REITs, and lots of other investment institutions. Those firms ALL have really nice offices.

Chris – great post. Just an FYI that when we started the GP best practices at Parish one of our goals was the shared expense reduction / group purchasing power point that you raised for our portfolio then (both GPs and their underlying companies). Maybe it was a different time / different group, but we couldn’t ever get the kinds of savings we’d hoped for (5 – 10% target), we maybe got to 1% and that was with a lot of effort.

You’ve got one point that is really something the industry could do well with: “tell top students they are guaranteed a job in your portfolio”. This would help so much to motivate people to join a company that is doing something new. It would also make getting investment from a vc worthwhile…I don’t see much reason to do so now without this sort of thing.

This is pretty much exactly how I feel VCs/Angel Funds in general should be run. Awesome post. One thing I would add to the IRR point is that, while this is a natural focus, there are also a ton of other positive aspects to making a deal you should focus on to hedge against the possibility IRR or ROI isn’t a factor. Maybe something you’ve written about before, but I’d love to hear 5 reasons why you invest aside from deals with good ROI potential.

But Chris, all those things are actual work! How could you ever recruit top talent to be VCs if you required them to do actual work? Better to hire them like CEOs, and worry about getting top talent first, and worry about their job responsibilities second.